Chart Signals: Indices bounce but is it sustainable?

18:45, October 18th 2016
· By Colin Cieszynski

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Indices have staged some nice rallies today but with gains contained by moving averages and previous resistance, it remains questionable as to whether today’s action is a trading bounce or the start of a new advance. Today’s trading may tell. Meanwhile, USD easing back a bit has opened the door to rallies by GBP and also by resource Dollars like AUD and NZD.

Asia Pacific Indices

Australia 200 held 5,400 for now but a bounce has been contained by the 50-day average near 5,440 and with the RSI still under 50 the index looks vulnerable. Next potential downside support near 5,370 then 5,300 with more resistance near 5,470.

Japan 225 is bumping up against 17,000 round number resistance which has held so far. Support climbs toward 17,800 a Fibonacci level. Rising RSI indicates increasing accumulation. Next potential resistance near 17,165 the September high.

Hong Kong 50 has a nice trading bounce yesterday but so far the rally has been contained by 23,410 Fibonacci resistance with more possible near 23,500. Similarly RSI remains below 50 keeping its broader downtrend intact. Next resistance on a breakout near 23,615 with channel support in place at the 23,000 round number.

North American and European Indices

US 30 is moving up a bit within its 18,000 to 18,360 trading range climbing from near 18,070 to 18,230 before falling back toward 18,180 as it still can’t shake a distribution trend of lower highs. RSI still under 50 indicates momentum still turning downward and today’s pop may be just a trading bounce.

US NDAQ 100 has popped back up above 4,800, advancing on 4,860 with RSI regaining 50 confirming that an upswing has started within a 4,740 to 4,900 sideways channel. Support rises toward 4,840 from 4,820.

US SPX 500 has bounced up from near 2,126 toward 2,142 but remains unable to reconquer 2,150 where it broke the rising neckline of a head and shoulders top. RSI holding 40 encouraging but it really needs to retake 50 to call off the current downtrend.

Germany 30 is rallying up off another successful test of support near 10,500 driving up toward 10,650. This appears to be an upswing within a broader sideways trend with next resistance possible near 10,700 then 10,780.

Commodities

Gold looks like it’s starting to recover with RSI back above 30 from oversold territory signalling an upswing underway as downward pressure eases. Initial resistance remains in place at the 200-day average near $1,264 with support rising toward $1,260 from $1,250. Next potential resistance near $1,278,

Crude Oil WTI is still consolidating between $49.00 and $51.30 trading pretty much right on the $50.00 round number. RSI falling back toward 50 indicates upward momentum fading into consolidation.

FX

US Dollar Index failed to hold above 98.00 and has started to slip back trading between 97.60 and 97.80 with next potential support near 97.45 then 96.90. RSI falling back under 70 from overbought signals a correction starting.

EURUSD tried to retake $1.1000 but faltered near $1.1020 and has resumed its downtrend sliding back toward $1.0990 with next potential support near $1.0955 then $1.0905. RSI suggests downward pressure levelling off but it’s not suggesting more of a pause than an upturn.

GBPUSD is breaking out of a symmetrical triangle today as it rallies up from $1.2220 toward $1.2320. RSI regaining 30 from oversold confirms an upswing underway with next potential resistance near $1.2390.

NZDUSD is starting to pick up, rallying up from near $0.7100 through $0.7195 a Fibonacci level that may become support and on toward $0.7220. Momentum confirmation pending as RSI tests 50. Next potential resistance near $0.7245 and the 50-day average then $0.7300.

AUDUSD appears to be under renewed accumulation taking a run at the top of its $0.7500 to $0.7700 treading channel and the top of a 40 to 60 channel in the RSI. A breakout would signal the start of a new uptrend with next potential resistance near $0.7725 then $0.7755.

USDSGD is starting to roll over and may have peaked for now. Unable to hold above $1.3900 it has dropped back into the $1.3850 to $1.3880 zone with next potential support near $1.3800 in a pullback. RSI dropping under 70 from overbought suggests a correction starting.

USDJPY remains stuck trading near 104.00 unable to launch an assault on the 105.00 round number while refusing to fall back toward 103.00 or 102.50 either. RSI indicates upward momentum has levelled off but isn’t cracking either.

GBPJPY continues to form an ascending triangle base of higher lows below 128.60 recently advancing into the 127.40 to 128.20 area. RSI indicates downward pressure weakening. Next resistance on a breakout looks possible near 130.00.

EURJPY is sitting on 114.00 and its 50-day average as it drifts back and forth between 112.50 and 116.50. RSI slipping under 50 signals momentum turning downward.

USDCAD continues to roll over, slipping back under $1.3100 to test its 50-day average near $1.3060 before bouncing back toward $1.3140 to set a lower high. Next potential support after that appears near the $1.3000 round number. RSI breaking under 50 confirms momentum turning back downward.

USDMXN is breaking down today in a big way, taking out its 50-day average near 18.90 and falling toward 18.72 with next potential support near 18.56 a 38% Fibonacci retracement. RSI breaking under 40 confirms downward momentum accelerating.

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